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Energy, finance deals key to pivotal Cop 28 success

  • Market: Biofuels, Coal, Condensate, Crude oil, Hydrogen, LPG, Natural gas, Oil products, Petrochemicals
  • 05/12/23

Agreements that address the role of fossil fuels and payments for loss and damage will be needed if the summit is to succeed, writes Caroline Varin

Success at the UN Cop 28 climate summit in Dubai this month will be defined by how strong a signal global leaders are ready to send on energy and finance. Whether the meeting is the pivotal event that many are hoping for may depend on the outcome of talks over two sticking points — the role of fossil fuels and who will pay for loss and damage incurred from the effects of climate change.

The stakes are higher than ever this year. A UN report shows that global temperatures are on course to rise to 2.5-2.9°C above pre-industrial levels, and could rise by 3°C this century if efforts on mitigation — cutting emissions — stay the same as today. The Paris climate agreement sets a goal of limiting global warming to "well below" 2°C above pre-industrial averages, and preferably to 1.5°C.

Pressure is mounting for Cop 28 to agree on an ambitious energy package to triple renewable energy capacity and double energy efficiency by 2030, and support to include a phase-out of all fossil fuels is gathering.

Cop 27 last year reiterated language adopted at Cop 26 for a "phase-down" of unabated coal-fired power, despite a push from 80 countries to include language around phasing down all fossil fuels. But there has been a shift in rhetoric this year. Cop 28 president-designate Sultan al-Jaber is calling for a "responsible phase-down of all fossil fuels", and support is growing from the EU, the US, fossil fuel producers such as Canada and Australia, and vulnerable and developing countries.

But a lack of a united line on fossil fuel language — phase-out or phase-down, unabated or all — means that debates risk getting stuck on details, while key producers, including Russia, Mideast Gulf and African countries, and consumer China have signalled they would not support a phase-out. Some want a focus on cutting fossil fuel emissions instead and are seeking support for abatement technologies.

Decisions at Cop are rooted in countries' economies, think-tank E3G programme lead Leo Roberts says. At Cop 26, "countries felt comfortable backing [coal phase-down language] because it reflected a real-world trend, in which economics are firmly stacked against coal power". But "the same shifts are not happening on oil and gas", Roberts says. Coal, oil and gas production in 2030 is the level needed to limit global temperature increases to 1.5°C, according to the UN. Observers hope to see progress on coal, with calls from the US to end foreign financial support for coal-fired power plants. Global coal use continues to hit fresh highs and coal-fired power capacity is still growing.

Times tables

UN secretary-general Antonio Guterres reiterated his call for countries to commit to phasing out fossil fuels with a clear timeline, as well as tripling renewables capacity and doubling energy efficiency. Greenhouse gas emissions must be reduced by 43pc and methane by a third by 2030 in order to not exceed the 1.5°C limit, the UN's Intergovernmental Panel on Climate Change says.

G20 leaders have agreed to pursue tripling global renewable energy capacity by 2030 from 2019, and reaching a deal on this is one of al-Jaber's key goals. He is keen for parties to "build on the outcomes of the G20", but a deal could hinge on whether developing countries get the assurances they need on funding. Investment in Africa's energy sector needs to more than double to more than $200bn/yr by 2030 for the continent to meet its energy-related climate goals, the IEA says.

The world's two biggest emitters, the US and China, this month reaffirmed their 2021 agreement to co-operate on reducing power sector carbon emissions, cutting methane emissions and boosting renewable energy. This sent a positive signal, as strained US-China relations have weighed on co-operation for the energy transition. China unveiled a methane plan. And progress towards a 2021 global methane pledge could come from the US or the EU. Brussels recently agreed a law setting methane limits for fossil fuel imports from 2030. Al-Jaber — who is also chief executive of Abu Dhabi's state-owned oil company Adnoc — is working with the oil and gas industry for it to commit to halving oil and gas industry Scope 1 and 2 emissions — those from producing, transporting and processing oil and gas — and reaching near-zero methane emissions by 2030. "This could be important, but only if companies beyond the usual suspects adopt aggressive methane reduction targets," research organisation WRI energy director Jennifer Layke says. Methane emissions from human activities could rise by up to 13pc over 2020-30, an IEA report found.

Mitigation deals will hinge on how finance discussions progress, not only for the energy transition but also on adaptation and loss and damage. A lack of climate finance from developed countries obstructed progress at Cop 27. A key focus for developing countries is a $100bn/yr climate finance goal, which wealthy nations agreed to provide by 2020 but failed to reach. The OECD says the goal may have been hit last year, although the data are unverified.

German special envoy for international climate action Jennifer Morgan hopes this could "build some confidence". But it depends on how far developed countries are ready to go in setting a new finance goal from 2025. Some developing countries want the goal to be based on costs outlined in a 2022 UN Framework Convention on Climate Change (UNFCCC) report, which are similar to those recognised by the G20 — $5.8 trillion-5.9 trillion before 2030. Agreeing a new number will be difficult.

The same goes for discussions on loss and damage. A transitional committee agreed on recommendations for setting up a loss and damage fund at Cop 28. Parties are likely to stand behind the package, with none willing to risk the consensus as it could affect other decisions, WRI senior adviser Preety Bhandari says. But some members expressed reservations, and deep divisions remain on who should pay into the fund. Some say the list should include countries whose economic circumstances have changed since the UNFCCC was established in 1992.

Saudi Arabia signalled that it favours a "different approach" to contributing to multilateral finance. The EU has promised a "substantial" contribution, while Denmark and Germany also pledged some money, according to WRI. But there are no indications on the amount. Observers point to momentum around broader finance architecture reforms, and the opportunity to increase political pressure during the UNFCCC's first global stocktake, which will conclude at Cop 28.

Stocktake signals

The UNFCCC global stocktake is a five-yearly undertaking to measure progress towards the Paris accord, and is intended to inform the next round of emissions-reductions plans, due in 2025. It should provide all parties with a chance to reflect on past achievements and find common ground. It could also act as an anchor for finance and fossil fuel discussions during Cop 28.

The stocktake needs to "double down on what was committed in Paris in 2015, not just on 1.5°C, the mitigation targets and the clean energy transition, but on loss and damage, finance or building more multilateral cohesion", E3G senior associate Alden Meyer says. But the political response is likely to hit the same stumbling blocks that have hindered Cop negotiations so far. Australian energy minister Chris Bowen says he expects a "substantial and contested discussion". And contributions ahead of the conclusion prove him right.

"This is a particularly big moment — if it goes well, it will set up Cop 30 in Brazil [when new climate targets are due]," Meyer says. "If it goes poorly and doesn't send a clear signal, it is going to make it much harder to build trust over the next two years. And of course, we are running out of time."

GHG emissions

Climate finance for developing countries

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23/06/25

Brent crude tops $80/bl after US strikes on Iran

Brent crude tops $80/bl after US strikes on Iran

Singapore, 23 June (Argus) — Crude oil futures rose in early trading on Monday, sending Brent crude to a five-month high above $80/bl, after the US bombed Iran's nuclear sites. The front-month August Brent contract on Ice rose by 5.7pc to a high of $81.40/bl shortly after trading got underway in Asia. Brent last closed above $80/bl in January. Prices later eased, with Brent trading at $78.92/bl at 7:40am Singapore time (23:40 GMT). The Nymex front-month August WTI contract rose by 6.2pc to a high of $78.40/bl, before dropping back to $75.74/bl. The US carried out air strikes on Iran's Fordow, Natanz and Isfahan nuclear sites early on 22 June local time. The strikes were a "spectacular military success" and the sites have been "completely and totally obliterated", US president Donald Trump said. The International Atomic Energy Agency (IAEA) confirmed the attacks and said it had identified extensive damage to the Isfahan site in particular. It said the extent of damage to the Fordow facility, which is heavily fortified and built inside a mountain, is unclear. Radiation levels at the sites have not increased following the strikes, it said, citing Iranian authorities. Iran's foreign ministry condemned what it described as "brutal military aggression" by the US against its nuclear facilities. It remains unclear how Tehran will respond to the attacks. Any attempt by Iran to close the strait of Hormuz would be "a terrible mistake," US secretary of state Marco Rubio said on 22 June. The strait is the global oil market's single most vulnerable chokepoint, through which pass about 17mn b/d of crude and products, or about a quarter of seaborne oil trade. "It's economic suicide for them if they do it, and we retain options to deal with that," Rubio said. By Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US bombs nuclear sites in Iran: Update


22/06/25
News
22/06/25

US bombs nuclear sites in Iran: Update

Updates with remarks from President Donald Trump Washington, 21 June (Argus) — The US conducted air strikes on three nuclear facilities in Iran, President Donald Trump said Saturday evening. US bombers targeted the heavily fortified, underground facility at Fordow and sites at Natanz and Isfahan, Trump said on his social media platform. "The strikes were a spectacular military success," Trump said in a televised address Saturday night. "Iran's key nuclear enrichment facilities have been completely and totally obliterated. Iran, the bully of the Middle East, must now make peace. If they do not, future attacks will be far greater and a lot easier." Trump waited until after the US planes had left Iranian airspace before making the announcement. Israel's air and missile strikes, underway since 13 June, had already targeted those three facilities, in addition to some domestic energy infrastructure and urban areas across Iran. UN nuclear watchdog the IAEA on Friday warned of potential nuclear safety hazards from the ongoing Israeli attacks on Iran's nuclear facilities and cautioned Israel against targeting Iran's Busherh nuclear power plant and a nuclear research laboratory in Tehran. Washington-based military experts assessed that only the US Air Force had the right type of munitions to destroy Fordow. Involving the US in the Israel-Iran war is a watershed moment for Trump's presidency. Trump in the past decade has often lambasted his predecessors for involving the US in costly and fruitless military adventures in the Middle East. But he has changed his tune since the beginning of Israel's offensive on Iran, claiming that eliminating Iran's nuclear program was worth the US involvement. Trump, in his televised address, referenced the US' killing of senior Iranian military commander Qassem Soleimani in January 2020 — the last time US and Iranian forces directly exchanged fire. Tehran's response at that time involved missile attacks on US bases in Iraq that wounded more than 100 US military personnel, but drew no heavy US retaliation. The markets will closely watch Tehran's reaction to the US air strikes. Even before the US bombing raids, Trump's public musings about a possible US role in Israel's campaign against Iran in the past week spurred the oil industry and shipping sectors to increase the risk premiums embedded in their calculations. Most immediately at stake are Iran's 2.5mn b/d of crude, condensate and products exports, which mostly head to China. Oil markets are also concerned about the risk of contagion if Israel and the US draw retaliatory attacks elsewhere in the Mideast Gulf or jeopardize shipping through the strait of Hormuz — the global oil market's single most vulnerable chokepoint, through which pass about 17mn b/d of crude and products, or about a quarter of seaborne oil trade. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US bombs nuclear sites in Iran


22/06/25
News
22/06/25

US bombs nuclear sites in Iran

Washington, 21 June (Argus) — The US conducted air strikes on three nuclear facilities in Iran, President Donald Trump said Saturday evening. The US bombers targeted the heavily fortified, underground facility at Fordow and sites at Natanz and Isfahan, Trump said on his social media platform. He said he would make a televised address at 10pm ET Saturday "regarding our very successful military operation in Iran". "A full payload of BOMBS was dropped on the primary site, Fordow," Trump said. Trump waited until after the US planes had left Iranian airspace before making the announcement. Israel's air and missile strikes, underway since 13 June, already targeted those three facilities, in addition to some domestic energy infrastructure and urban areas across Iran. UN nuclear watchdog the IAEA on Friday warned of potential nuclear safety hazards from the ongoing Israeli attacks on Iran's nuclear facilities and cautioned Israel against targeting Iran's Busherh nuclear power plant and a nuclear research laboratory in Tehran. Washington-based military experts assessed that only the US Air Force had the right type of munitions to destroy Fordow. Involving the US in the Israel-Iran war is a watershed moment for Trump's presidency. Trump in the past decade often lambasted his predecessors for involving the US in costly and fruitless military adventures in the Middle East. But he has changed his tune since the beginning of Israel's offensive on Iran, claiming that eliminating Iran's nuclear program was worth the US involvement. Trump's public musings about a possible US role in Israel's campaign against Iran in the past week spurred the oil industry and shipping sectors to increase the risk premiums embedded in their calculations. Trump since 13 June alternatively held out the prospect of diplomacy and discussed killing senior Iranian leaders. Even today, after the US air strikes, Trump posted that "NOW IS THE TIME FOR PEACE!". The markets will closely watch Tehran's reaction to the US air strikes. Most immediately at stake are Iran's 2.5mn b/d of crude, condensate and products exports, which mostly head to China. Oil markets are also concerned about the risk of contagion if Israel and the US draw retaliatory attacks elsewhere in the Mideast Gulf or jeopardize shipping through the strait of Hormuz — the global oil market's single most vulnerable chokepoint, through which pass about 17mn b/d of crude and products, or about a quarter of seaborne oil trade. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Iran’s refineries at risk in escalating conflict


20/06/25
News
20/06/25

Iran’s refineries at risk in escalating conflict

Iran would probably have to curtail products exports and turn to the import markets if its refineries are attacked, write Ieva Paldaviciute and Nader Itayim Dubai, 20 June (Argus) — Key oil and gas production and export facilities have stayed out of the firing line a week into the conflict between Tehran and Tel Aviv, bringing a degree of relief to global markets. But the targeting of downstream assets by both sides has raised the spectre of looming domestic fuel shortages if the conflict endures. No Iranian crude refineries have been hit yet in the Israeli strikes that, for the most part, have focused on key military and nuclear-related infrastructure and personnel. But strikes on two gas processing facilities in the south of the country and two products storage facilities on the outskirts of Tehran suggest refineries, or condensate splitters, soon could be affected. Iran retaliated by attacking Israel's 197,000 b/d Haifa refinery on 15 June, damaging is power supply system. The plant initially continued crude processing while shutting some secondary units, but it fully halted operations on 17 June. Iran has nearly 2mn b/d of crude refining capacity spread across nine facilities, which rises to about 2.4mn b/d when including the 360,000 b/d Persian Gulf Star condensate splitter in Bandar Abbas, on the Mideast Gulf coast. This is up from below 1.9mn b/d a decade ago, after capacity additions at the 58,000 b/d Shiraz, 630,000 b/d Abadan and 220,000 b/d Tehran refineries, among others. Iran nevertheless has grappled with a severe products imbalance in recent years, driven primarily by a fast increase in its domestic fuel consumption. Although operations at all refineries remain unimpeded, the conflict has triggered a frenzy of fuel buying by Iranians, particularly in Tehran, with Israel warning residents to leave the city as it intensifies its bombing campaign. If any refining infrastructure is hit, Iran may quickly have to halt products exports to ensure that domestic supply can be met. Iran is a net exporter of fuel oil and naphtha, but its position as a gasoline and gasoil exporter has diminished in recent years owing to its fast-growing domestic demand. The reimposition of US sanctions on Iran by US president Donald Trump during his first term in 2018 and his "maximum pressure" campaign on Tehran at the start of his second term in January have only added pressure to its products trade. Iranian naphtha is shipped mainly to the UAE, where it is used as a gasoline blendstock. Iran exported about 116,000 b/d of naphtha in January-May, data from consultancy FGE show, down by 12pc from its 2024 exports. Transfer news Iranian fuel oil typically makes its way to floating storage hubs in Asia-Pacific, often after multiple ship-to-ship transfers designed to obscure its origin. Some cargoes are then re-exported to China and bought by independent refiners as feedstock fuel. Fuel oil exports stood at 252,000 b/d in the first five months of this year, down from 264,000 b/d last year. Iran has had to turn to imports to bridge the gap between its gasoline production of about 660,000 b/d and average consumption of 780,000 b/d during the Iranian year to 20 March 2025, according to state-owned refiner NIORDC. Iran's diesel production has also been playing catch-up, with heavily subsidised consumption exacerbated by fuel smuggling to neighbouring countries. Iran still exported 42,000 b/d of diesel this year, according to FGE, but this is less than half of the 102,000 b/d it exported last year. The Haifa refinery is a key supplier to Israel's domestic market but it also exported about 12,000 b/d of diesel and gasoil, and 13,000 b/d of fuel oil in January-May, mostly to neighbouring countries in the Mediterranean. A prolonged shutdown could result in Israel turning to products imports, pressuring supply chains in the Mediterranean. Israel aims to restart the plant within weeks. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Pakistan loses EU GSP+ ethanol status


20/06/25
News
20/06/25

Pakistan loses EU GSP+ ethanol status

London, 20 June (Argus) — The European Commission today suspended Pakistan's Generalised Scheme of Preferences Plus (GSP+) status for imports of ethanol. The removal is effective from today, 20 June. A request was lodged in May last year by France, Germany, Spain, Italy, Hungary and Poland, who sought to activate Article 30 of the GSP Regulation, arguing that ethanol coming from Pakistan since 2022 has "caused a serious disturbance to the Union ethanol market". Under Article 30, the commission can "adopt an implementing act in order to suspend the preferential arrangement in respect of the products concerned". Pakistan was granted GSP+ status in 2014, and this expired at the end of 2023. The status was temporarily extended until 2027. The GSP+ grants reduced-tariff or tariff-free access to the EU for vulnerable low- and lower- to middle-income countries that, according to the EU, "implement 27 international conventions related to human rights, labour rights, protection of the environment and good governance". It fully removes custom duties on two-thirds of the bloc's tariff lines in Pakistan's case, including ethanol. Pakistan is a major supplier of industrial-grade ethanol to Europe, but it does not export fuel-grade ethanol. According to market participants, this is because production facilities in the country lack sustainability certifications such as the International Sustainability and Carbon Certification (ISCC) that are required for biofuels to qualify under the EU Renewable Energy Directive (RED) targets. Fuel-grade ethanol was not included in the bloc's measures. Several Pakistani market participants were hopeful the GSP+ status will remain in place, which has continued to support ethanol exports from the country to the EU ( see table ). But uncertainty has weighed on demand from Europe recently, suppliers said. A participant told Argus that Pakistani sellers may look to offer more into Africa to soften the drop in demand. Some European suppliers anticipated this outcome, and have already stopped importing from Pakistan. European renewable ethanol association ePure expressed concern about the decision to exclude fuel ethanol from the scope of the measures, noting this could open the door to unintended loopholes and weaken the overall effect of the safeguard efforts. By Evelina Lungu and Deborah Sun European ethanol imports from Pakistan Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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